Mpomoko wa Uchumi Tanzania

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[TD="class: contentheading, width: 100%"]Govt T-bond fetches a measly Sh1bn
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[TD="class: createdate"] Thursday, 29 December 2011 23:01
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By Sylivester Ernest, The Citizen Reporter
Dar es Salaam. The central bank raised less than Sh1 billion out of the targeted Sh20 billion in a treasury bond auction on Wednesday as investors, who included commercial banks and other financial institutions, shied away from the less lucrative deal.This is a major flop for the government which is reportedly in a bad financial shape, with an increasing inflation.
The Bank of Tanzania auctioned a 10-year treasury bond on Wednesday at an 11.44 per cent interest coupon, as part of efforts to raise money to bridge revenue deficit in the implementation of the budget. But according to market reports seen by Reuters news agency, the auction was hugely undersubscribed, with the central bank selling less than 5 per cent of the amount of bonds on offer.
The BoT received bids worth just Sh0.926 billion and accepted all of them, making the auction one of the countrys worst bond sales in recent history. Analysts say investors see the dividends from the bond as less attractive because the 11.44 per cent interest coupon is currently below the inflation rate of 19.2 per cent.

Available information indicates that some councils in the country have not received substantial amounts of development budget money. Reports from Kigoma indicate that the council has received only Sh0.25 billion, which is equivalent to a meagre 0.03 per cent of the Sh9.4 billion development budget for the current financial year.
In 2010/11 Kigoma received only 44 per cent of its development budget.

Though the government has been refuting claims that its budget is in a shambles following the increasing inflation, economists propose an all-stakeholders initiative to look for solutions to the problem.

The recent tug of war between Finance and Economic Affairs minister Mustafa Mkulo and his shadow counterpart Zitto Kabwe regarding the effects of inflation on the implementation of the budget only helps to expose the unwillingness of the government to solve the problem, analysts say.

Mr Mkulo recently reacted strongly over a recent comment by Mr Kabwe that the current inflation, the highest ever, has caused a six per cent deficit on the national budget.A senior economist and research fellow at the University of Dar es Salaams Economic Research Bureau, Dr Haji Semboja, sees no reason for Mr Mkulo to react negatively on Mr Kabwes comments pointing out that the economy was in tatters.

Dr Semboja says the countrys ability to export at the moment is very low and that there is a clear payment imbalance with the rate of economic growth, projected at 8-10 per cent, to bring about sustainable development, increased employment and fight poverty.

At the moment, the government box is very low which means that there is poor collection of revenues and hence lack of capital, says Dr Semboja adding: It is perplexing that even agencies like the BoT (Bank of Tanzania) cant see this we are going back to where we were 30 years ago, he says.

He said the rise in foreign exchange rate was a clear sign that things were not normal, arguing that cutting expenditure by the government was one way to stem inflation.

Concerning MPs allowances, Dr Semboja says there is financial indiscipline in the government at the moment, an indication that there is no government willingness to act on the economic dilemma.There seems to be an incompatibility between our expenditures and revenue collection our dependence on budget supplement is very huge and needs a review, he says.

It is about time the government involved stakeholders in looking for solutions to solve the crisis, he says.
With prices of commodities and electricity soaring, some economists insist that turning to locally made goods is the best alternative for imported items.Almost all these countries we buy goods from are now in the same trouble as we are in , says a Mr Mkude, an economist with a local bank.

He advises the government to reduce its recurrent expenditure as a way of covering up the deficit.
In recent days, the country has witnessed a rise in prices of different commodities, following a slump in the value of the shilling and a reported budget deficit.

Mr Mkulo, however, has come out strongly to refute claims that the 19.3 per cent inflation had any effects to the national budget.

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My comment: Are the Tanzanians taking this seriuously or we are just in deep sleep?
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